Student loans — overwhelmed with debt
My daughter graduated college in May and now her student loan grace period is over. She’s got over $140,000 in loans of which $105,000 are from private lenders because my husband & I have had our own financial troubles and our credit has suffered. We did not qualify for the Parent Plus gov. loans. Our in-laws co-signed for her. Now her payments are around $1600+ a month and she cannot afford that. We tried to refinance/consolidate and they will not give her more than a 15 year term and at almost 8% interest, then would only give her about 1/3 of the $105,000. That does not help. Again, with a co-signer she may qualify for a better rate and longer term, but we really hate to put that burden on someone else again. Do you have any suggestions as to who we turn to? We’ve tried all the common loaners (So-Fi, LendKey...) Also, she doesn’t have a long credit history even tho her score is over 750, since she just graduated & started working in May. She is also self employed/contracted. We’ve set up quarterly payments to the IRS but this month she doesn’t have the money. Would she be penalized for not making a payment, or just owe more come April? Thank you for your help.
Terry Says
Whew -- your letter completely illustrates the problems of going into debt for an education. I certainly hope she picked a major that will pay off big time. Because these are private loans, there is no forbearance or income-based repayment. And because she does not have a long credit history, she cannot refinance. I realize I'm just repeating what you have found out first-hand. And it looks like the new tax law will make the interest non-deductible. I have absolutely NO good ideas for you. Your in-laws will be on the hook if she defaults, and if she can't pay, maybe they can at least help her refinance the loans. It will be better for them in the long run. And it will lower the current burden of interest adding up. As for her own situation, she definitely must keep up with her IRS payments. That's the worst thing to default on. In fact, as you now know, you have the two kinds of debt -- student loans and IRS -- that cannot be erased via bankruptcy. I'm assuming she lives at home with you to save money. And I'm assuming that she has a weekend and evening job -- and that you and your husband are doing the same. You are going to have to dig your way out of this by earning extra money -- all of you! It might be waitressing, babysitting, dog-walking -- every little bit helps. And if you want independent confirmation -- and perhaps something I failed to think of -- call800-388-2227 and talk to the nearest local office of the National Foundation for Credit Counseling. Please let me know if they come up with an idea I missed!
